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Nifty

Technical Outlook

* The Nifty started monthly expiry session with a positive gap (16858- 16994) but failed to capitalise on it as index failed to see follow through strength above last session’s high. Consequently, initial pullback fizzled out and drifted below last Wednesday’s low of 16820. The daily price action formed a bear candle carrying lower high-low, indicating continuance of corrective bias. In the process, Nifty midcap, small cap fell over 0.4%, each. Meanwhile, India VIX is still hovering at the upper band of the consolidation of 22-15, suggesting settling down of volatility post RBI Policy outcome

* The lack of follow through strength signifies prolonging of corrective bias ahead of RBI policy. Therefore, a decisive close above previous session’s high of 17026 would be the prerequisite for a pause in the ongoing downward momentum else the corrective bias would continue

* Key point to highlight is that, past three week’s 1300 points decline hauled daily and weekly stochastic oscillator in oversold territory with a reading of 6 and 18, respectively, indicating possibility of technical pullback from oversold conditions cannot be ruled out. We expect supportive efforts to emerge around key support zone of 16800- 16700 amid elevated global volatility. Meanwhile, 17300 would continue to act as immediate hurdle as it is 38.2% retracement of past three week’s decline (18096-16789) coincided with Monday’s Gap area 17327-17156

* Structurally, over the past five weeks index has retraced 38.2% of preceding nine week’s rally (15185-18000) while absorbing global volatility, signifying healthy retracement amid relative outperformance against global peers that makes us believe, ongoing corrective move would find its feet around 16800-16700 zone as it is confluence of: A) 50% retracement of June-September rally of 15185- 18000 B) 52 week EMA is placed at 16753

* In line with the benchmarks, broader market indices retraced 38% of past two months ~30% rally. We believe, ongoing healthy retracement would help broader market indices to cool off overbought conditions and set the stage for next leg of up move

* In the coming session, index is likely to witness open on a negative note tracking subdued global cues. We expect index to stage a pullback in the vicinity of 52 weeks EMA post RBI policy outcome. Hence, use dip towards 16675-16703 for creating long position for the target of 16791

Nifty Bank

Technical Outlook

*The daily price action formed a bear candle with continuation of lower high -low sequence indicating failed intra day pullbacks amid extended profit booking ahead of RBI policy . Past eleven session decline measuring 10 % from highs of 41840 has rendered prices to oversold readings with daily stochastic of 4 ahead of Friday’s monetary policy outcome

* Going ahead, we expect supportive efforts to emerge from the key support zone of 37300 -37500 however such price action would be confirmed only once index starts making higher high -low formation . Immediate hurdle is now placed at 39200 mark which is 38 . 2 % retracement of past ten session decline (41840 -37626 )

* Structurally , in the longer time frame the index has witnessed a faster retracement as eight month’s decline (41829 -32990 ) was completely retraced in just two and half months highlighting overall positive bias

* The index has support around 37300 -37500 levels as it is the confluence of the 100 days EMA (currently placed at 37640), lower band of rising channel accompanying price action since June lows at 37450 and the 50 % retracement of the major up move (32290 -41840 ) In the coming session, index i s likely to witness open o n a negative note tracking subdued global cues. We expect index to stage a pullback i n the vicinity of 100 days EMA coincided with lower band of rising channel, post RBI policy outcome. Hence, use dip towards 37 580-37 640 for creating long position for the target o f 37 930, maintain a stop loss of 37 440

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